In certain cases, a company that permanently provides goods or services in a foreign country, may face certain risks if it establishes a permanent place of business in the country where it is conducting business. International double taxation avoidance agreements provide the right to tax the company’s income in the foreign country when a place of business is established.
The establishment of a permanent place of business results in the following tax obligations in the foreign country:
- paying income tax on the profits from the permanent place of business;
- paying payroll taxes on the incomes of employees working at the permanent place of business;
- paying VAT.
A permanent place of business pays taxes in a foreign country on the same basis as the local residents (read more about the tax rates ).
The 1Office teams in Estonia, Sweden and Finland will advise you on questions related to a permanent place of business, help you with the necessary registrations, and assist in preparing and submitting the necessary reports.
The package for the registration of a permanent place of business includes all the necessary registrations and 2 hours of consultation.
What services do we provide?
Registration and deletion of a permanent place of business
Before starting to operate, a foreign legal person must register with the tax board. In order to register, an application must be submitted to become an income tax payer, and if necessary, a VAT payer, and a foreign employer.
After registration, the tax board will issue a local registry code and the permanent place of business is required to maintain accounting records and submit tax declarations on the same basis as local businesses.
When discontinuing the permanent provision of goods and services in a foreign country, the permanent place of business of the foreign legal person must be deleted from the register.
80% of 1Office Group’s client deal with cross-border business and many of them face risks related to their permanent place of business in a foreign country. In order to find out if your company is in this risk group, fill out the following questionnaire and send it to us (). Download the questionnaire here.
Permanent place of business reporting
When a permanent place of business develops, there is an obligation to submit tax declarations and reports on the same basis as local taxpayers.
1Office provides accounting services to foreign legal persons with permanent places of business in Estonia, Finland and Sweden. Read more about our bookkeeping services here.
Services are provided based on the bookkeeping services pricelist.
We also advise clients who already have a permanent place of business in a foreign country. We communicate with foreign tax boards, help to calculate the profits subject to taxation, assess whether it’s more profitable for a client to establish a subsidiary or to continue as a permanent place of business.
Advisory services are provided based on the pricelist.